Layne Christensen Reports Third Quarter Fiscal 2013 Financial Results

Layne Christensen Reports Third Quarter Fiscal 2013 Financial Results
*Net income from continuing operations for Q3 FY2013 was $8.8 million, or
$0.45 per diluted share, compared to net income from continuing operations
of $8.7 million, or $0.45 per diluted share, last year.
*During Q3 FY2013, Layne's Energy Division completed the sale of its
exploration and production assets that were previously written down to
market value, for $15 million.
*Heavy Civil incurred a pre-tax loss of $5.5 million in Q3 FY2013 compared
to a pre-tax loss of $3.7 million last year; however, improved by $3.4
million from Q2 FY2013 as a result of overhead reductions and the nearing
of completion of low-margin legacy projects.
*Mineral Exploration revenues and pre-tax earnings were down 15.0% and
34.5%, respectively, in Q3 FY2013 compared to Q3 FY2012, primarily
reflecting reduced mine exploration activities by our clients in Australia
and Africa.
*As of October 31, 2012, cash and cash equivalents were $44.3 million,
long-term debt, excluding current maturities, was $118.3 million, and
Layne stockholders' equity was $435.9 million ($21.99 per share).
"Our Water Resources, Inliner, and Geoconstruction segments each reported
increased profitability over the same period last year. Heavy Civil's pre-tax
loss in Q3 FY2013 declined by 38% from the immediately preceding second
quarter, reflecting the success of our cost cutting initiatives, management
changes at this business, and a deliberate migration toward negotiated work.
Although there is still much to be done, we are also very pleased with Heavy
Civil's progress in working through low margin legacy backlog while winning
new projects with higher associated margins. New business development at each
of our Divisions remains a high priority. Global economic and credit
uncertainty produced a decline in mineral exploration activity in Australia
and Africa, the result of which was lower quarterly revenues at our Mineral
Exploration business. This revenue decline and the impact of fixed segment
overhead costs combined to produce a notable decrease in segment pre-tax
earnings in Q3 FY2013. Although we expect to maintain profitability at our
Mineral Exploration segment in Q4 FY2013, we now expect Mineral Exploration's
pre-tax earnings for FY2013 will be down 15-20% as compared with FY2012
results. Layne's overall profitability for Q3 FY2013 was also positively
impacted by the reversal of previously established reserves for uncertain tax
positions."
--Rene J. Robichaud, President and Chief Executive Officer
Financial Data Three Months % Nine Months %
(000's, except 10/31/12 10/31/11 Change 10/31/12 10/31/11 Change
per share data)
Revenues
--Water Resources $72,962 $70,320 3.8 $213,582 $207,096 3.1
--Inliner 32,115 36,959 (13.1) 101,682 97,607 4.2
--Heavy Civil 70,472 88,463 (20.3) 219,723 265,235 (17.2)
--Geoconstruction 44,816 21,085 112.5 104,208 64,199 62.3
--Water 220,365 216,827 1.6 639,195 634,137 0.8
Infrastructure
--Mineral 61,263 72,109 (15.0) 202,254 203,873 (0.8)
Exploration
--Other 1,251 877 42.6 4,433 2,824 57.0
Total revenues $282,879 $289,813 (2.4) $845,882 $840,834 0.6
Net income from
continuing
operations $8,823 $8,708 1.3 $10,559 $31,485 (66.5)
attributable to
Layne Christensen
Company**
Diluted income
per share - $0.45 $0.45 -- $0.53 $1.60 (66.9)
continuing
operations
Net income (loss)
attributable to $8,476 $8,753 (3.2) $(11,799) $32,429 (136.4)
Layne Christensen
Company**
Diluted
income(loss) per $0.43 $0.45 (4.4) $(0.60) $1.65 (136.4)
share
Reconciliation to
non-GAAP Financial Three Months % Nine Months %
Data
(000's, except per 10/31/2012 10/31/2011 Change 10/31/2012 10/31/2011 Change
share data)
Net income (loss)
from continuing
operations $8,823 $8,708 1.3 $10,559 $31,485 (66.5)
attributable to
Layne Christensen
Company
Loss on
remeasurement of -- -- *** 7,705 -- ***
equity investment
Net income from
continuing
operations
attributable to
Layne Christensen $8,823 $8,708 1.3 $18,264 $31,485 (42.0)
Company excluding
loss on
remeasurement of
equity investment*
Diluted income per
share - continuing
operations excluding $0.45 $0.45 -- $0.92 $1.60 (40.0)
loss on
remeasurement of
equity investment
* Management believes the exclusion of this item provides a useful basis for
evaluating underlying business performance, but should not be considered in
isolation and is not in accordance with, or a substitute for, evaluating
business performance utilizing GAAP financial information.
** During the third quarter of fiscal 2013, the Company completed the sale of
the exploration and production assets of its Energy Division for $15 million.
Results of the Energy Division recorded as discontinued operations was a loss
(net of tax) of $0.3 million for Q3 FY2013.
*** Not meaningful
MISSION WOODS, Kan., Dec. 6, 2012 (GLOBE NEWSWIRE) -- Layne Christensen
Company (Nasdaq:LAYN) today announced financial results for the fiscal 2013
third quarter (Q3 FY2013) and nine months ended October 31, 2012, including a
discussion of results of operations by division.
Revenues for Q3 FY2013 decreased $6.9 million, or 2.4%, to $282.9 million from
$289.8 million for the fiscal 2012 third quarter ended October 31, 2011.This
decline was driven primarily by lower revenues at Heavy Civil, Inliner, and
Mineral Exploration, partially offset by higher revenues at the
Geoconstruction and Water Resources divisions.Refer to division data below
for additional details.
Net income from continuing operations for Q3 FY2013 was $8.8 million, or $0.45
per diluted share, compared to $8.7 million, or $0.45 per diluted share, in
the same period last year. Net income for Q3 FY2013, including discontinued
operations, was $8.5 million, or $0.43 per diluted share compared to $8.8
million, or $0.45 per diluted share, in last year's third quarter.
Cost of revenues decreased $1.7 million, or 0.8%, to $224.7 million (79.4% of
revenues) for Q3 FY2013 from $226.4 million (78.1% of revenues) for the same
period last year. Margin pressures across most divisions, especially those
exposed to the municipal sector, and cost overruns in Heavy Civil increased
cost of revenues as a percentage of revenues for Q3 FY2013.
Selling, general and administrative expenses decreased 10.1% to $38.8 million
(13.7% of revenues) for Q3 FY2013 from $43.2 million (14.9% of revenues) for
the same period last year. The decline was primarily due to lower legal and
professional fees of $2.5 million, lower operating taxes of $2.0 million due
to a prior year assessment made in a foreign jurisdiction, and $2.4 million
lower compensation costs due to severance costs incurred in the prior year
related to the transition of the chief executive officer and other executives.
Depreciation and amortization increased 14.4% to $15.7 million for Q3 FY2013
from $13.8 million for the same period last year, primarily the result of
additional assets from acquisitions and property additions.
Equity in earnings of affiliates decreased 24.1% to $4.9 million for Q3 FY2013
from $6.5 million for the same period last year. The decrease is primarily due
to the purchase on May 30, 2012, of the remaining 50% interest in Diberil, a
previously non-controlled equity investment, the current earnings from
whichare now consolidated and no longer recorded as equity in earnings.
Interest expense increased to $1.6 million for Q3 FY2013 from $0.7 million for
the same period last year, the result of increased borrowings on our credit
facilities to fund capital expenditures, acquisitions and working capital
needs.
Other income, net, for Q3 FY2013 consisted primarily of recognition of $0.7
million of previously deferred gain on the sale of an operating facility in
California, gains on other sales of surplus equipment of $0.6 million and
foreign exchange losses of $0.7 million.
An income tax benefit of $1.0 million was recorded for continuing operations
for Q3 FY2013 compared to income tax expense for continuing operations of $4.2
million for Q3 FY2012.The Company had several discrete period items impacting
the tax rate for Q3 FY2013, as certain of the Company's tax years in the U.S.
and foreign jurisdictions were closed with no adjustments, resulting in the
reversal of previously established reserves for uncertain tax positions
totaling $3.1 million. The effective tax rate for continuing operations for Q3
FY2013, excluding these discrete items, was 26.5% compared to 30.6% in Q3
FY2012.The decrease in the effective rate without regard to discrete items as
compared to the prior year was primarily due to a change in the mix of
domestic and foreign income along with the favorable tax treatment of equity
in earnings of affiliates which are permanently reinvested.
Summary of Operating Segment Data
The following table summarizes financial information for the Company's
operating segments. A discussion of the results for Q3 FY2013 of each segment
follows the table.
Three Months Nine Months
Ended October 31, Ended October 31,
(in thousands) 2012 2011 2012 2011
Revenues
Water Resources $72,962 $70,320 $213,582 $207,096
Inliner 32,115 36,959 101,682 97,607
Heavy Civil 70,472 88,463 219,723 265,235
Geoconstruction 44,816 21,085 104,208 64,199
Water Infrastructure 220,365 216,827 639,195 634,137
Mineral Exploration 61,263 72,109 202,254 203,873
Other 1,251 877 4,433 2,824
Total revenues $282,879 $289,813 $845,882 $840,834
Equity in earnings of affiliates
Geoconstruction $-- $1,236 $3,488 $2,161
Mineral Exploration 4,947 5,284 15,581 16,864
Total equity in earnings of $4,947 $6,520 $19,069 $19,025
affiliates
Income (loss) from continuing
operations before income taxes
Water Resources $4,372 $1,122 $9,023 $15,166
Inliner 2,791 2,430 7,927 7,815
Heavy Civil (5,487) (3,658) (21,632) (3,336)
Geoconstruction 5,233 4,313 4,617 9,219
Water Infrastructure 6,909 4,207 (65) 28,864
Mineral Exploration 10,535 16,074 46,854 52,139
Other (1,010) (750) (2,989) (2,078)
Unallocated corporate expenses (6,794) (5,083) (23,481) (22,354)
Interest expense (1,604) (700) (3,020) (1,761)
Total income from continuing $8,036 $13,748 $17,299 $54,810
operations before income taxes
Division Data
Water Resources Division Three Months Nine Months
Ended October 31, Ended October 31,
(in thousands) 2012 2011 2012 2011
Revenues $72,962 $70,320 $213,582 $207,096
Income before income taxes 4,372 1,122 9,023 15,166
Water Resources Division revenues increased $2.6 million, or 3.8%, for Q3
FY2013, primarily the result of projects beginning in Ethiopia and improved
performance in the Southeast and Midwest Groups due to drought-related
projects.
The increase in income before income taxes was primarily the result of the
improved revenue performance in the Southeast and Midwest regions, and steps
being taken to rationalize overhead costs in the water treatment product
lines.
The backlog in the Water Resources Division was $89.8 million as of October
31, 2012, compared to $92.0 million as of July 31, 2012, and $110.4 million as
of October 31, 2011.
Inliner Division Three Months Nine Months
Ended October 31, Ended October 31,
(in thousands) 2012 2011 2012 2011
Revenues $32,115 $36,959 $101,682 $97,607
Income before income taxes 2,791 2,430 7,927 7,815
Inliner Division revenues decreased $4.8 million, or 13.1%, for Q3 FY2013, due
mostly to activity in two U.S. offices which, during the quarter, were in the
process of completing significant projects and waiting to mobilize to new
projects. Despite lower revenues in those offices, income before income taxes
for Q3 FY2013 increased 14.9% due to an improved mix of business in other
Inliner offices.
The backlog in the Inliner Division was $64.0 million as of October 31, 2012,
compared to $65.2 million as of July 31, 2012, and $91.0 million as of October
31, 2011.
Heavy Civil Division Three Months Nine Months
Ended October 31, Ended October 31,
(in thousands) 2012 2011 2012 2011
Revenues $70,472 $88,463 $219,723 $265,235
Income (loss) before income taxes (5,487) (3,658) (21,632) (3,336)
The decline in revenues for the Heavy Civil Division in Q3 FY2013 was
primarily due to a decrease of $19.8 million for plant construction work. We
continue to be more selective as we seek projects with higher margin
opportunities. As a result, we have significantly reduced our plant
construction operations in most areas of the country since this type of work
does not currently meet our profit criteria.
The pre-tax loss at Heavy Civil for Q3 FY2013 increased by $1.8 million, or
50.0%, from last year's third quarter, due to reduced activity levels,
continued cost overruns on certain projects, and excess administrative
overhead costs.However, the Q3 FY2013 loss declined by $3.4 million, or
38.0%, from Q2 FY2013.We are focused on completing low margin legacy projects
as cost efficiently as possible while securing new business with a higher
margin potential.We are also reducing overhead at Heavy Civil. Headcount in
the division is 19% less than last year.
The backlog in the Heavy Civil Division was $325.8 million as of October 31,
2012, compared to $309.4 million as of July 31, 2012, and $261.5 million as of
October 31, 2011. The backlog at October 31, 2012, includes the previously
announced project for Islamorada, Florida, for $88.7 million, which is
expected to proceed over the next two years.
Geoconstruction Division Three Months Nine Months
Ended October 31, Ended October 31,
(in thousands) 2012 2011 2012 2011
Revenues $44,816 $21,085 $104,208 $64,199
Income before remeasurement of equity 5,233 4,313 12,322 9,219
investment
Loss on remeasurement of equity -- -- (7,705) --
investment
Income before income taxes 5,233 4,313 4,617 9,219
Equity in earnings of affiliate, -- 1,236 3,488 2,161
included in above earnings
On May 30, 2012, the Geoconstruction Division acquired the remaining 50% of
Diberil. Subsequent to that date, the results of Diberil are reported on a
consolidated basis, rather than on an equity basis as had been done
previously.
Geoconstruction Division revenues increased $23.7 million in Q3 FY2013, which
reflected revenue of $15.6 million due to the Diberil consolidation (no
comparable amount was recorded last year), as well as revenues associated with
the progress of a ground stabilization project in Washington D.C.
Including its consolidated and equity basis results, Diberil contributed $4.7
million of income before income taxes for Q3 FY2013, compared to $1.2 million
in the same period last year. Results at Diberil have improved over the last
year due to good performance on a river crossing project in the Amazon.
Income before income taxes increased $0.9 million for Q3 FY2013 from the prior
year period, due to the Diberil results as discussed above, offset by the
adverse impact of upfront start-up costs on more recent projects.
The backlog in the Geoconstruction Division was $42.7 million as of October
31, 2012, compared to $71.5 million as of July 31, 2012, and $30.7 million as
of October 31, 2011.
Mineral Exploration Division Three Months Nine Months
Ended October 31, Ended October 31,
(in thousands) 2012 2011 2012 2011
Revenues $61,263 $72,109 $202,254 $203,873
Income before income taxes 10,535 16,074 46,854 52,139
Equity in earnings of affiliates, 4,947 5,284 15,581 16,864
included in above earnings
Mineral Exploration Division revenues decreased $10.8 million, or 15.0%, for
Q3 FY2013 from the same period last year. The decline in revenues for the
three months was primarily in Australia and Africa, reflecting reduced mine
exploration activities by our clients.
Income before income taxes decreased $5.5 million, or 34.5%, for Q3 FY2013 as
compared to last year. Management has taken steps to reduce overhead to offset
the impact of the decrease in revenues noted above; however, certain expenses
such as depreciation on previously acquired assets cannot be reduced in the
short term. The combination of the lower activity levels and fixed overhead
costs produced the earnings decline during the quarter.
Equity in earnings from our affiliates in Latin America was also impacted
during Q3 FY2013 by slowdowns in mineral exploration activity.
Other Three Months Nine Months
Ended October 31, Ended October 31,
(in thousands) 2012 2011 2012 2011
Revenues $1,251 $877 $4,433 $2,824
Loss before income taxes (1,010) (750) (2,989) (2,078)
Other revenues and losses before income taxes are primarily from our Layne
Energy Services initiative of expanding water related services to the energy
markets.
Unallocated Corporate Expenses
Corporate expenses not allocated to individual divisions, primarily included
in selling, general and administrative expenses, were $6.8 million for Q3
FY2013 compared to $5.1 million for the same period last year. The increase
was primarily due to increases in legal and professional expenses and various
other expense categories.
Corporate Headquarters Consolidation
As announced today, Layne's Board of Directors has approved the relocation of
the Company's global corporate headquarters from Mission Woods, Kansas, to The
Woodlands, a suburb of Houston, Texas. The move is expected to commence in
Spring 2013 and be completed by Winter 2013. The move will involve most
executive positions in Layne's corporate leadership, as well as certain other
management and staff positions. Most senior executives from Layne's six
divisions will ultimately consolidate into the Houston headquarters.
In connection with this relocation, the Company expects that it will incur
pre-tax charges of approximately $14-$17 million, associated with personnel
relocation, employee attrition and replacement, and office relocation and
other costs. Estimated expenses of $2-3 million will be incurred in Q4 FY2013,
with a substantial part of the remaining costs incurred in FY2014.
Conference Call
Rene Robichaud, President & CEO, and Jerry W. Fanska, Senior Vice President --
Finance, will conduct a conference call at 11:00 AM ET / 10:00 AM CT this
morning to discuss these results and related matters. Interested parties may
participate in the call by dialing (877) 212-6082 (Domestic) or (707) 287-9332
(International). The conference call will also be broadcast live via the
Investor Information sector of Layne's website at www.layne.com. To listen to
the live call, please go to the website at least 15 minutes early to register,
download and install any necessary audio software.If you are unable to listen
live, the conference call will be archived on the website for approximately 90
days.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange
Act of 1934.Such statements may include, but are not limited to, statements
of plans and objectives, statements of future economic performance and
statements of assumptions underlying such statements, and statements of
management's intentions, hopes, beliefs, expectations or predictions of the
future.Forward-looking statements can often be identified by the use of
forward-looking terminology, such as "should," "intended," "continue,"
"believe," "may," "hope," "anticipate," "goal," "forecast," "plan," "estimate"
and similar words or phrases. Such statements are based on current
expectations and are subject to certain risks, uncertainties and assumptions,
including but not limited to:the outcome of the ongoing internal
investigation into, among other things, the legality, under the FCPA and local
laws, of certain payments to agents and other third parties interacting
withgovernment officials in certain countries in Africa relating to the
payment of taxes and the importing of equipment (including any government
enforcement action which could arise out of the matters under review or that
the matters under review may have resulted in a higher dollar amount of
payments or may have a greater financial or business impact than management
currently anticipates), prevailing prices for various commodities,
unanticipated slowdowns in the Company's major markets, the availability of
credit, the risks and uncertainties normally incident to the construction
industry, the impact of competition, the effectiveness of operational changes
expected to increase efficiency and productivity, worldwide economic and
political conditions and foreign currency fluctuations that may affect
worldwide results of operations. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially and adversely from those anticipated,
estimated or projected.These forward-looking statements are made as of the
date of this filing, and the Company assumes no obligation to update such
forward-looking statements or to update the reasons why actual results could
differ materially from those anticipated in such forward-looking statements.
Layne is a global solutions provider to the world of essential natural
resources—water, mineral and energy.We offer innovative, sustainable products
and services with an enduring commitment to safety, excellence and integrity.
The Layne Christensen Company logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3466
LAYNE CHRISTENSEN COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA
Three Months Nine Months
Ended October 31, Ended October 31,
(unaudited) (unaudited)
(in thousands, except per share 2012 2011 2012 2011
data)
Revenues $282,879 $289,813 $845,882 $840,834
Cost of revenues (exclusive of
depreciation, depletion, (224,742) (226,416) (674,516) (652,819)
amortization shown below)
Selling, general and (38,827) (43,212) (120,916) (120,156)
administrative expenses
Depreciation, depletion and (15,736) (13,756) (45,593) (39,994)
amortization
Loss on remeasurement of equity -- -- (7,705) --
investment
Equity in earnings of affiliates 4,947 6,520 19,069 19,025
Interest expense (1,604) (700) (3,020) (1,761)
Other income (expense), net 1,119 1,499 4,098 9,681
Income before income taxes 8,036 13,748 17,299 54,810
Income tax (expense) benefit 976 (4,212) (6,151) (21,363)
Net income from continuing 9,012 9,536 11,148 33,447
operations
Net income (loss) from (347) 45 (22,358) 944
discontinued operations
Net income (loss) 8,665 9,581 (11,210) 34,391
Net income attributable to (189) (828) (589) (1,962)
noncontrolling interests
Net income (loss) attributable to $8,476 $8,753 $(11,799) $32,429
Layne Christensen Company
Earnings per share information attributable
to Layne Christensen shareholders:
Basic income per share - 0.45 0.45 0.54 1.62
continuing operations
Basic income (loss) per share - (0.01) 0.00 (1.15) 0.05
discontinued operations
Basic income (loss) per share $0.44 $0.45 $(0.61) $1.67
Diluted income per share - 0.45 0.45 0.53 1.60
continuing operations
Diluted income (loss) per share - (0.02) 0.00 (1.13) 0.05
discontinued operations
Diluted income (loss) per share $0.43 $0.45 $(0.60) $1.65
Weighted average shares 19,487 19,460 19,477 19,452
outstanding - basic
Dilutive stock options and 287 144 319 200
nonvested shares
Weighted average shares 19,774 19,604 19,796 19,652
outstanding - dilutive
As of
(in thousands) October 31, January 31,
2012 2012
(unaudited) (unaudited)
Balance Sheet Data:
Cash and cash equivalents $44,325 $41,916
Working capital, including current maturities of long 190,871 136,404
term debt
Total assets 838,862 805,836
Total long term debt, excluding current maturities 118,340 52,716
Total Layne Christensen Company stockholders' equity 435,926 448,665
Common shares issued and outstanding 19,826 19,669
CONTACT: Layne Christensen Company
Jerry W. Fanska
Sr. Vice President Finance
913-677-6858
www.layne.com
The Equity Group Inc.
Devin Sullivan
Sr. Vice President
212-836-9608
www.theequitygroup.com
Layne Christensen Company